Ah- the power of youth- if we had only known then what we know now, well, we’d probably would have had a few less skinned knees, saved ourselves some pain throughout the troubling teen years, and probably have quite the nest egg saved up for a rainy day. The best we can do is try to teach our children basic values and habits (and hope they don’t rebel against us).
Of all of the important values and habits that we need to instill, financial habits are some of the toughest. As parents, we want nothing but the best for our children, including nice clothes, a cool bike, and tons of other things that we got (or didn’t get) from our parents. We are in the midst of a generation who is trying to outdo their parents and spoiling our kids rotten in the process. We really aren’t helping them at all, and in the long run, the effects could be financially devastating for our future generations.
Kids will listen to some of the specific things that we tell them, but they are also very well aware of the term hypocrite , and aren’t afraid to use it. So basically, we need to practice what we preach. So here are the Top 3 Financial Habits to Instill in Our Kids (so we can all practice a bit first).
- Saving. Before you can save a dime, you need to make more money than you spend. This also means that you need to spend less money than you make (where the typical adults problems lie). Teaching your kids to save just a small amount, like 10%, is a small percentage that will not make a huge difference in their wallet, but will make an enormous difference in a savings account in just a year.
- Budgeting. Any and all financial commitments like bills and money owed to mom and dad need to be paid before any extra-curricular activities, like going to the movies or the mall. By showing our kids to create and maintain a budget (to include savings as well as fun), just like we do as adults, it will help to keep them on the right track to being able to live within their means.
- Responsible Credit Card Use. If you tell your kids that credit cards are bad , their reaction will not be a positive one, to say the least. Credit cards are not bad; Credit card abuse is bad. It all goes back to living within your means, and having a backup financial plan in case of emergency- like a credit card. Whenever possible, a credit card balance should be paid off by the end of the month.
Of course, the basic money stuff like keeping good financial records are always a given, and should be taught to our kids as soon as they have an income (allowance, paper route, babysitting, etc. so they can see where their money goes). When they head out and joint the part-time work force, be sure to have them open a checking account with attached debit card to “break them into” the financial habits they’ll need (and thank you for) as a young adult.
